Golden opportunity to accelerate Saudi green ambitions
Saudi Arabia has made sustainability a key pillar of its national economic transformational visions, exemplified in the Kingdom’s National Renewable Energy Program.
Two highly effective decarbonization strategies for Saudi organizations and communities include adopting energy-efficient strategies that reduce the demand and greening the current energy supply. For example, retrofitting buildings generates efficiencies by optimizing energy use in air conditioning, ventilation and other mechanical and electrical systems.
Heating, ventilation and air conditioning systems, in particular, can contribute to significant energy savings; heating and cooling easily account for 40 to 60 percent of a commercial building’s total energy costs.
Retrofits are not only associated with buildings but can also be aligned with citywide initiatives; street lighting can represent up to 40 percent of the electricity bills at the municipal level and accounts for 15 percent of global power consumption and 5 percent of greenhouse emissions. Replacing traditional street lights with smart LED energy-efficient luminaires delivers electricity savings of up to 80 percent.
Greening the current electricity supply also supports energy efficiency and further decarbonizes the energy sector. Energy production represents nearly three-quarters of global greenhouse gas emissions and is at the heart of the climate change challenge.
Sustainable growth in low-carbon distributed infrastructure, which includes district heating and cooling, distributed solar energy production and storage as well as low-carbon on-site utilities, can help accelerate industry decarbonization.
Saudi Arabia has distinct geographical and climatic conditions that make employing renewable energy sources at scale economically attractive, supporting efforts to diversify its energy mix. The Kingdom plans to build one of the world’s biggest green hydrogen facilities, which will be powered by over 4 gigawatts of solar and wind energy and operational by 2025.
The NEOM giga-project’s plant will create 650 tons of green hydrogen daily. The Kingdom is also building large wind farms at Yanbu, Wa'ad Al Shamal and Al-Ghat.
Technology can provide real impetus to the above strategies. A recent World Economic Forum report revealed that 40 percent of business leaders believe digital technologies are already positively impacting their sustainability goals. The report notes that digital technologies are being used to measure and track sustainability progress, optimize the use of resources, reduce greenhouse gas emissions and enable a more circular economy.
The key here is data and its potential — organizations can pursue a data-driven business model in shifting from a traditional cost management approach towards tangible optimized business productivity. This provides environmental and operational efficiencies, improves service quality and decreases costs.
In the case of ENGIE, we have developed an in-house digital product called Smart O&M, which allows us to seamlessly manage different types of assets, processes and business segments.
Smart O&M leverages digital technologies and data to offer ENGIE’s business entities three products: asset and spaces monitoring capabilities to enable conditioned-based maintenance, energy performance to steer consumption/production commitment, and service management to manage clients’ requests and reporting and on-site operations.
Each of these products is individually found in the market, but very few companies can seamlessly combine these three solutions, and none can embed the expertise of an industrial group like ENGIE.
Smart O&M allows us to optimize equipment performance and maximize energy savings/ energy production without additional costs or impact on users, reducing our clients’ global carbon footprint. Ultimately, enhancing operations and improvements through Smart O&M make the decarbonization journey more accessible to our clients.
While many business leaders we talk to express a desire to adopt such decarbonization goals, financial and technical challenges are significant barriers. Whether in-house solar projects, or municipal smart lighting, they all require a significant initial investment in hardware, infrastructure, sensors and software.
Additionally, these systems are complex, requiring specialized skills and knowledge, which is challenging for organizations whose core business is not managing energy demand and supply.
To bridge the technical and funding gap, public-private partnership models have emerged to support businesses and cities in raising funds needed for energy transition, boosting efficiency and raising technical standards.
In a PPP model, the energy development company will design, build, finance, operate and maintain the project throughout the contract period. While various financing options under this model exist, the build-own-operate and transfer format is today the most popular.
Under BOOT, an energy development company will set up a power plant at zero capex spending by the client, utilizing the client’s physical facilities for a fixed-term period. The client benefits from cheaper, green, reliable, constant and independent power during the power purchase agreement tenure. The client also has the option to own the system at the end of the PPA term and prolong the energy supply virtually for free.
ENGIE Solutions, backed by an extensive worldwide portfolio of projects, global expertise and the latest technology, is an ideal partner for Saudi organizations to accelerate the transition toward a carbon-neutral world.
• Pierre Cheyron is managing director, Africa, Middle East and Asia, ENGIE Energy Solutions.